Patents and Innovation Economics

Austrian Economics is always claiming a strong connection to the Philosophy of Aristotle. The Austrians main connection to Aristotle is the idea of apriorism. In philosophy apriorism is defined as the philosophical doctrine that there may be genuine knowledge independent of experience. This apriorism shows up particularly in Menger and Mises. In Mises case it is clearly related to his ideas on praxeology. In Menger’s case this comes from his epistemology in which he states there is an exact theoretical side of science and an inexact empirical side of science. The question is whether the Austrians’ claim to following Aristotle’s ideas or being neo-Aristotelian has any validity.

One of the most defining points of Aristotle’s philosophy was his disagreement with Plato’s “Theory of Forms.” Plato argued that we cannot trust our senses and the world they perceive is at best a vague, shadowy version of the real world. For more see Plato’s Allegory of the Cave. According to Plato if you see a red ball there is a perfect version of red and a perfect version of a ball in the “real world” and we are seeing some sort of distorted versions of these. Plato’s real world is often represented as being up in the sky, sort of a heaven. Since we cannot trust our senses, Plato’s answer is that we must just think about what has to be true and that will lead us to the truth. This is known as rationalism.

Aristotle rejected Plato’s ideas and said we could trust our senses. In order to verify (and integrate) that our conclusions from our senses are valid Aristotle created rules of thought or logic. It is important to remember that to Aristotle these conclusions were always based on (tested against) the real world evidence. In other words, logic was useful in reasoning about the world, but the ultimate proof was reality. This makes him diametrically opposed to Plato’s rationalism.

There is a famous painting entitled The School of Athens by Raphael in which Plato is pointing to the sky and Aristotle has his hand out pointing to the world before us that illustrates the differences between Aristotle and Plato. Aristotle’s epistemology is based in this world, where Plato thinks that the real world is somewhere else.

How did Austrians ever get the idea that apriorism is consistent with Aristotle? A search of Aristotle on the Internet Encyclopedia of Philosophy of Philosophy and the Stanford Encyclopedia of Philosophy does not show any mentions of apriorism or apriori. An informal search of academic papers and books finds only a couple of mentions of Aristotle and apriorism, except by Austrians (Austrian/Objectivists). Both argue that apriorism is inconsistent with Aristotle’s philosophy. One book says that Aristotle the empiricist exposes the vanity of armchair natural scientists and it is clear that Aristotle lies on the side of empiricism not apriorism.[1]

This idea that apriorism is consistent with Aristotle appears to come from Aristotle’s concept of axioms. Aristotle had one axiom, the principle of non-contradiction according the Stanford Encyclopedia of Philosophy. The explanation (justification) of this axiom sounds similar to the Austrians apriorism.

“Before embarking on this study of substance, however, Aristotle goes on in Book Γ to argue that first philosophy, the most general of the sciences, must also address the most fundamental principles—the common axioms—that are used in all reasoning. Thus, first philosophy must also concern itself with the principle of non-contradiction (PNC): the principle that “the same attribute cannot at the same time belong and not belong to the same subject and in the same respect” (1005b19). This, Aristotle says, is the most certain of all principles, and it is not just a hypothesis. It cannot, however, be proved, since it is employed, implicitly, in all proofs, no matter what the subject matter. It is a first principle, and hence is not derived from anything more basic.

What, then, can the science of first philosophy say about the PNC? It cannot offer a proof of the PNC, since the PNC is presupposed by any proof one might offer—any purported proof of the PNC would therefore be circular.”[2]

This axiom was expanded to three axioms, the law of identity, the law of the non-contradiction, and the law of the excluded middle. It seems to me that the other two laws follow from the law of identity.

This sounds similar to how Austrians justify their apriorism, however the Austrians extend the idea to state:

(a) that the fundamental axioms and premises of economics are absolutely true;

(b) that the theorems and conclusions deduced by the laws of logic from these postulates are therefore absolutely true;

(c) that there is consequently no need for empirical “testing,” either of the premises or the conclusions; and

(d) that the deduced theorems could not be tested even if it were desirable.[3]

While this was written by Murray Rothbard it is the logical conclusion of Menger’s “theoretical science.” These ideas are diametrically opposed to those of Aristotle. Austrian Economics is not Aristotelian, not science and not consistent with Objectivism.

I have pointed to an economic theory that is consistent with Aristotle, science, and Objectivism. Part of my insight came from “New Growth Economics”, whose central point is that wealth is created by the human mind. This should be exciting to Objectivists, because that sounds very much like Ayn Rand. It also points to an objective basis for economics. Every human needs to acquire and consume a minimum number of calories or they die. This provides an objective standard that is very similar to Rand’s standard for her ethics. It also ties economics to biology, particularly human biology, just like Rand tied her ethics to biology.

Inventions are the result of applying man’s reasoning power to the objective problems of life. The way we become wealthier is by increasing our level of technology. I explain this in more detail in my book, Source of Economic Growth; in my Savvy Street article, entitled ‘Inventing at the Intersection of Biology and Economics’; and in my 2015 & 2016 talks at Atlas Summit.

All species are biologically designed to spend most of their existence on the edge of starvation. The fact that human beings, starting around 1800, were the first species to permanently escape this condition, needs a profound answer based on man’s unique nature, his ability to reason.

[1] Walter E. Wehrle, The Myth of Aristotle’s Development and the Betrayal of Metaphysics